Friday, December 4, 2009

NLRB: Number of R Cases Drops

Norma RaeThe National Labor Relations Board released its Fiscal Year 2009 Performance and Accountability Report this week.  According to the report, although the Board's caseload remained steady, unfair labor practice (ULP) charges increased slightly and representation election petitions decreased by 14.4%.  Some other highlights:

  • the Board recovered $77,611,322 on behalf of employees as backpay or reimbursement of fees, dues, and fines, with 1,549 employees offered reinstatement; and
  • Regional Offices won 89.8% of Board and Administrative Law Judge ULP and compliance decisions in whole or in part.

What remains unclear is whether the decline in the number of R cases results from a diminished need for union representation, the hope that EFCA (in one form or another) will be signed into law, or something else.

Kevin Kraham

December 4, 2009 in Government Reports, Labor and Employment News, Labor Law, Union News, Workplace Trends | Permalink | Comments (2) | TrackBack (0)

Unemployment Rate Declines

Hiring  For what seems like an eternity, we've been reporting monthly unemployment data with a big downward sloping arrow.  Although the job situation is still bad, there's a moral victory this month in absence of the graphic.  According to the Labor Department, the unemployment rate dropped to 10%, down from 10.2%--representing a loss of only 11,000 jobs.  That's a huge improvement from previous months, which saw losses in the hundreds of thousands.  Of course, as things start to improve, the rate may not change (and may even go up a bit) as people who stopped looking for jobs start up again.

There were other hopeful signs though.  The use of temporary workers grew and the average workweek length increased, both of which suggest increased hiring in the future.


December 4, 2009 in Government Reports | Permalink | Comments (1) | TrackBack (0)

GAO Civil Rights Report and Two Supplements

GaoI posted yesterday that the GAO had issued a report summarizing the DOJ's enforcement of civil rights laws under the Bush Administration, and that report was the subject of hearings before the House Committee on the Judiciary. The report, Information on Employment Litigation, Housing and Civil Enforcement, Voting, and Special Litigation Sections' Enforcement Efforts from Fiscal Years 2001 to 2007 is now available. This report is supplemented by two additional smaller reports. One is the Testimony of Eileen Larance, the Director of Homeland Security and Justice: Opportunities Exist to Strengthen the Civil Rights Division's Ability to Manage and Report on Its Enforcement Efforts.

That report notes that for the enforcement actions studied,

Information on the specific protected classes and subjects related to matters and cases and the reasons for closing matters were not systematically maintained in ICM because the Division did not require sections to capture these data. As a result, the availability and accuracy of these data varied among the sections. For example, the Employment Litigation Section did not capture protected class and subject data for more than 80 percent of its matters. In contrast, these data were consistently recorded in ICM for the Housing and Civil Enforcement Section, which requires that protected class and subject data be recorded in ICM. In addition, congressional committees have requested information on reasons the Division did not pursue matters, including instances in which Division managers did not approve a section’s recommendation to proceed with a case. However, ICM does not include a discrete field for capturing the reasons that matters are closed and Division officials we interviewed could not identify instances in which Division managers did not approve a section’s recommendation to proceed with a case. By requiring sections to record such information, the Division could strengthen its ability to account for its enforcement efforts.

The other is a memo from Larance with specific recommendations for the case management system,

In summary, in accordance with DOJ guidance that encourages components to conduct assessments of electronic data systems at least once a year in order to ensure that the systems are performing cost effectively and continue to meet the needs of the users, the Division reported conducting annual assessments of ICM’s performance from fiscal years 2001 through 2006, but has not assessed the performance of ICM since then and lacks documentation of its prior assessments. As a result, the Division lacks information on how ICM is performing and whether it is meeting users’ needs. Additionally, by requiring sections to collect additional data in ICM on protected class and subject—information that is key to ensuring that the Division executes its charge to enforce statutes prohibiting discrimination on the basis of protected class and has repeatedly been requested by congressional committees for oversight purposes—the Division could strengthen its ability to account for its enforcement efforts. According to DOJ officials, when planning for ICM’s implementation with section officials, the Division did not consider requiring sections to record these data.

To strengthen the Division’s ability to manage and report on the four sections’ enforcement efforts, we recommend that the Acting Assistant Attorney General of the Division, among other things, (1) conduct and respond to annual assessments of the performance of the Division’s case management system and ensure that these assessments are documented and maintained so they can be used to improve the performance of the system and (2) require sections to record data on protected class and subject in the Division’s case management system in order to facilitate reporting of this information to Congress. DOJ concurred with our recommendations.

As a researcher interested in these enforcement data, I applaud the greater tracking of information. And if you're interested in the trend information the New York Times reported yesterday, here is the similar report for the Clinton Administration from 2000.


December 4, 2009 in Government Reports | Permalink | Comments (0) | TrackBack (0)

Frolik on Converting 401(K) Accounts into Federally Guaranteed Lifetime Annuities

Frolik Larry Frolik (Pitt) has posted on SSRN his interesting new paper: Protecting Our Aging Retirees: Converting 401(K) Accounts into Federally Guaranteed Lifetime Annuities.

Here is the abstract:

America’s retirees are faced with a potential financial disaster. Economic security in retirement has long depended on Social Security, private savings and employer provided retirement plans. While much attention has been paid to the financial problems of Social Security and the lack of private saving for retirement, little attention has been paid to an alarming development in employer provided retirement plans: the likely inability of retirees during the long years of their retirement to successfully manage their retirement funds accumulated in 401(k) and similar accounts.

We as a society have set up a funding system for retirement that assumes retirees will be able to successfully manage their IRAs for the 20 or 30 years of retirement. We know, however, that most will not. Some will lack the basic intelligence or knowledge of finance take on the risk, oversight and planning. Some will be fine managing an IRA at age 65, but lose the ability due to physical decline. Finally, millions of aging IRA owners will lose the ability to manage their finances because of the lost of mental capacity, primarily because of dementia. Asking individuals to husband a lump-sum payout from a 401(k) retirement account for the 20 to 30 years of retirement as they physically and mentally decline is a recipe for disaster. Unless we provide a more secure way to stretch retirement dollars into the twilight of retiree lives, we can expect to see more and more elderly retirees slide into poverty. The solution is to create federally guaranteed life-time annuities that retirees can purchase with the funds accumulated in their 401(k) retirement accounts.

I also have worried about a new generation basically dependent on 401(k) type retirement accounts.  Unlike the traditional defined benefit plans of old, there is no guarantee that employees will receive a certain amount once they retire.  The host of factors that Larry underscores makes his idea about a federally guaranteed lifetime annuity an excellent one.


December 4, 2009 in Pension and Benefits, Scholarship | Permalink | Comments (0) | TrackBack (0)

Thursday, December 3, 2009

Franken Versus Mandatory Arbitration

Sen. Al FrankenFollowing up on a lecture I gave about resolving workplace disputes, I played this and this in class.  The students appeared to be interested, as they engaged in some lively debate about mandatory arbitration after watching the videos.  Senator Franken's comments are also sparking some lively debate on the Hill.  


December 3, 2009 in Arbitration, Beltway Developments, Labor and Employment News, Teaching, Workplace Safety | Permalink | Comments (1) | TrackBack (0)

House Passes Bill to Clarify FMLA Hours of Service Requirements for Flight Crews

Pilot and faA bill intended to close a Family and Medical Leave Act (FMLA) loophole for airline pilots and flight attendants is one step closer to becoming law.  On Tuesday, the House of Representatives passed the Airline Flight Crew Technical Corrections Act by voice vote.  Last month, the Senate approved the Act.  Assuming President Obama signs this bill into law, more flight crew members will qualify for FMLA leave.

Presently, employees are eligible to take FMLA leave if they have worked for their employer for at least 12 months and for at least 1,250 hours during the previous 12 months, which amounts to at least 60 percent of a standard 40-hour workweek.  This method of calculation impacts pilots and flight attendants, whose time spent on the job between flights or on mandatory standby does not count as “hours worked” pursuant to the Fair Labor Standards Act, which is used to calculate the requisite number of hours for FMLA purposes.  The House-approved bill will clarify that the hours pilots or flight attendants work or for which they are paid -- not just those spent in flight -- count toward the minimum hours calculation.  So, if a pilot, for example, had worked or been paid for 60 percent of the applicable monthly guarantee, or the equivalent amount annualized over the preceding 12-month period, and if she or he had worked or been paid for at least 504 hours during the previous 12-month period, she or he would be eligble to take FMLA leave.

During floor consideration of the Senate bill, Sen. Patty Murray (D-Wash.), who introduced the legislation, said:

This bill reflects the intent of the FMLA’s original sponsors to provide an alternative way to include flight crews that addresses the airline industry's unique time-keeping methods. I am proud that the Flight Crew Technical Corrections Act fixes a technical problem that has left many full-time flight crew members ineligible for family medical leave for many years due to the unique way their work hours are calculated.


December 3, 2009 in Beltway Developments, Labor and Employment News, Worklife Issues | Permalink | Comments (0) | TrackBack (0)

New GAO Report on Civil Rights Enforcement During the Prior Administration

CongressAccording to the New York Times, Congress will release a report today on Civil Rights enforcement during the Bush administration by the Government Accountability Office. The report is not yet up on the GAO's website, but I'll post a link when it is. Today marks the beginning of the first oversight hearing the House Committee on the Judiciary, Subcommittee on the Constitution, Civil Rights, and Civil Liberties will hold on civil rights enforcement. Video can be seen here.

It may not surprise many, but civil rights enforcement declined under the Bush administration. Here is an excerpt from the NYT article,

The 180-page report, obtained by The New York Times, is densely packed with statistics about civil rights enforcement by the division’s sections. The accountability office also examined a sampling of matters that were closed without further action, finding several cases — including the curtailed voter intimidation inquiry — in which supervisors rejected the recommendations of career lawyers to go forward.

The report represents a comprehensive review of the division’s litigation activity in the Bush administration. When compared with the Clinton administration, its findings show a significant drop in the enforcement of several major antidiscrimination and voting rights laws. For example, lawsuits brought by the division to enforce laws prohibiting race or sex discrimination in employment fell from about 11 per year under President Bill Clinton to about 6 per year under President George W. Bush.

The study also found a sharp decline in enforcement of a section of the Voting Rights Act that prohibits electoral rules with discriminatory effects, from more than four cases a year under Mr. Clinton to fewer than two cases a year under Mr. Bush.

Republicans will reportedly use this hearing as an opportunity to demonstrate that the current administration has politicized the office equally--just in a different way.


December 3, 2009 in Government Reports | Permalink | Comments (0) | TrackBack (0)

The Proliferation of Public Sector Employee Furloughs and Layoffs

Boss_button Daniel Mitchell (UCLA Management) has posted on the LERA Listserv a link to an article that highlights the proliferation of public sector employee furloughs. The article includes a handy state-by-state chart of both state employee furloughs and layoffs.

The article from observes:

Moving from furloughs of state employees to more permanent downsizing, states are girding for the deepest workforce cuts yet when they hammer out their fiscal 2011 budgets next year. In preparation, many are taking stock of every position in state government to determine what effect job cuts and the possible elimination of whole departments will have on revenues, expenses and the quality of government services . . . .

Since the recession began in December 2007, nearly all states have instituted hiring freezes, at least 75 percent have eliminated vacant positions and more than half have laid off and furloughed workers. In all, nearly 1 million state workers — one in five — have been affected by the cutbacks, according to estimates compiled by

After hiring freezes, furloughs are the preferred short-term option for most states, because they preserve morale and keep talented workers on the job for better days ahead. But experts say the benefits are illusory. The best employees still tend to look for other jobs.

Needless to say, states and their employees face challenging times ahead. Just from the perspective of law professors at state schools, the impact has already been dramatic.


December 3, 2009 in Public Employment Law | Permalink | Comments (0) | TrackBack (0)

More Iqbal Fun: Senate Hearings on Iqbal/Twombly

Capitoldome Title of this post directly from friend of the blog, Joe Seiner (South Carolina). Can't state it any better than that.

Joe writes:

I thought that I would mention the Senate Hearings on Iqbal/Twombly which took place [yesterday] before the full Senate Judiciary Committee . . . . Ordinarily, the issue is more of a civ pro one, but the hearing really focused on the civil rights implications of the decisions, and they were particularly animated, as some members went after the former solicitor general who was defending the decisions.
Also, Stephen Burbank (Penn) did a superb job of explaining why the decisions are problematic, and the Senate invited a number of other academics to submit written statements to the Judiciary Committee for inclusion in the hearing record, including regular blog followers such as (conveniently!) me and Suja Thomas [Illinois]. 

Here is Joe's statement on these cases to the Senate .  Like Joe, I am sure that this will not be the last chapter on this legislation.


December 3, 2009 in Beltway Developments, Employment Discrimination | Permalink | Comments (0) | TrackBack (0)

Wednesday, December 2, 2009

It's Back for a New Trial for Jack Gross

GavelOn Monday, the Eighth Circuit issued its decision on remand from the Supreme Court in Gross v. FBL Financial Services.The Eighth Circuit had to implement the Supreme Court's ruling on the issue of whether Gross was entitled to a mixed motive jury instruction that shifted the burden of persuasion to the employer to prove that it would have made the same decision regardless if the jury believed that age was a motivating factor in the decision. As we all know, the Supreme Court said no to this--that in age discrimination cases under the ADEA, a plaintiff always bears the burden of persuasion that age was the but-for cause of the adverse employment action.

That was not all the Eighth Circuit had to decide, though. It also had to decide an issue not before the Supreme Court: whether to let the judgment below stand on the adequate and independent state law ground that the instruction was proper under Iowa's Civil Rights Act.

In its analysis, the Eighth Circuit analyzed decisions of Iowa's Supreme Court and concluded that Iowa has adopted Justice O'Connor's concurrence from Price Waterhouse as the standard for entitlement to a mixed motives jury instruction. So, a plaintiff must present direct evidence that age was the reason for the adverse employment action before a jury will be told that the employer has to demonstrate that it would have made the same decision regardless to avoid liability.

This analysis is interesting for a couple of reasons. First, the mixed motive case that the court relies on was decided in 1990, well before the US Supreme Court's decision in Costa v. Desert Palace, which clarified that Title VII does not require direct evidence to shift this burden. The Eighth Circuit avoided that issue by relying on the language in the CRA of 1991 that nullified Justice O'Connor's proposed rule (a motivating factor), which the Supreme Court had relied on in Desert Palace, and contrasting that language with the language in Iowa's Civil Rights Act, which uses the "because of" language that the Supreme Court had found to mean "but-for" in Gross, although not in Price Waterhouse. It's hard to predict, though, what the Iowa Supreme Court might do now with Iowa's law.

Second--but a related point, the Eighth Circuit's decision highlights the two separate issues that mixed motives cases outside of Title VII present: 1. does there need to be direct evidence to get to mixed motives; and 2. Is the defense a defense to liability or only damages? Iowa law requires direct evidence to get to mixed motives, but it's a defense to liability and not only damages.

In any event, Jack Gross now has the burden to prove not just that age was a motivating factor in FBL's decision, but he also has to persuade the jury that his age was the reason he was demoted.


December 2, 2009 in Employment Discrimination | Permalink | Comments (0) | TrackBack (0)

Tuesday, December 1, 2009

Applying While Black

Hiring  The New York Times has a piece on the difficulties that African-Americans--even those with excellent resumes--are having getting jobs.  Several studies have shown that these problems aren't unique to the current economic situation, although the economy may be making things worse:

[T]here is ample evidence that racial inequities remain when it comes to employment. Black joblessness has long far outstripped that of whites. And strikingly, the disparity for the first 10 months of this year, as the recession has dragged on, has been even more pronounced for those with college degrees, compared with those without. Education, it seems, does not level the playing field — in fact, it appears to have made it more uneven.

College-educated black men, especially, have struggled relative to their white counterparts in this downturn, according to figures from the Bureau of Labor Statistics. The unemployment rate for black male college graduates 25 and older in 2009 has been nearly twice that of white male college graduates — 8.4 percent compared with 4.4 percent.

Various academic studies have confirmed that black job seekers have a harder time than whites. A study published several years ago in The American Economic Review titled “Are Emily and Greg More Employable than Lakisha and Jamal?” found that applicants with black-sounding names received 50 percent fewer callbacks than those with white-sounding names.

A more recent study, published this year in The Journal of Labor Economics found white, Asian and Hispanic managers tended to hire more whites and fewer blacks than black managers did.

As the article notes, the possible reasons for these disparities may often involve subtle or even subconscious discrimination.  Either way, there seem to be real barriers for black applicants that would be very difficult to prove in litigation.


December 1, 2009 in Employment Discrimination | Permalink | Comments (0) | TrackBack (0)

EEOC Files Suit Over Use of Credit and Criminal Histories in Hiring

IKCAPG2267CA4F3DICCAIOTNMNCA0GGXNECADGJQUDCA5QHIUTCAG0X9EYCAA30VHRCAYHF864CAIDA3YBCAI2GA5ECAGCFQTACAMOH166CAXKWA9NCARFR7UBCACI0PQACAJ2KF78CAIZ5BD4CATYB5KL  Continuing their recent focus on the potential discriminatory effects on racial and ethic minorities from employers' use of criminal background checks in hiring, EEOC filed a class action law suit on September 30, 2009.  EEOC alleged that a Dallas-based convention and corporate events planning company unlawfully discriminates against black, Hispanic and male job applicants by using credit histories and certain types of criminal arrests or convictions as selection criteria in hiring.  The law suit alleged that since at least 2001, the Freeman Cos. use of credit histories and criminal backgrounds as selection criteria has a "significant disparate impact" on black applicants and its use of "criminal justice history information" as a selection criterion has an adverse impact on Hispanic and male applicants.

The complaint alleges that the effects of using credit histories and criminal background deprive a class of black, Hispanic and male job applicants equal employment opportunity and is not job related and consistent with business necessity and there exist appropriate, less discriminatory alternative selection procedures. 

This is just another example of employers using selection devices that are not related to the job in question and rolling the dice on whether it is going to have a disparate impact on certain groups.  However, in this case the employer should have known that using credit and criminal histories as an exclusionary device would have a significant disparate impact upon the protected groups alleged. 


December 1, 2009 | Permalink | Comments (1) | TrackBack (0)

Workplace Prof Blog Welcomes Guest Blogger Kevin Kraham

Kraham Kevin is a shareholder in the D.C. office of Littler Mendelson. He currently teaches Cross Cultural Management and Negotiations, and next semester he will teach Global Labor and Employment Law, both at Georgetown University's School of Continuing Studies.

Kevin began his career in employment and labor law with the U.S. Equal Employment Opportunity Commission as an investigator, law clerk, and administrative judge. Kevin now represents clients in employment litigation before administrative agencies and state and federal courts, labor arbitrations, collective bargaining negotiations, and equal employment counseling and training. He represents a variety of employers, including those in the transportation, education, hospitality, distribution, healthcare, government contracting, and nonprofit industries.

Kevin's airline and railroad experience includes representation proceedings and carrier interference cases before the National Mediation Board; federal court litigation with unions under the Railway Labor Act; system board of adjustment and public law board arbitrations; collective bargaining negotiations, including initial contracts, concession bargaining, and merger agreements; and advice regarding contract administration.

Kevin received his B.A. from Boston University in 1992 and his J.D. from American University Washington College of Law in 1996. He lectures regularly on public charter school and education matters. In 2007, he addressed the American University Journal of Gender, Social Policy & the Law's conference on assisting law students with disabilities. His comments about workplace issues have been quoted in TIME Magazine, USA Today, and The Washington Times.

Welcome, Kevin!


December 1, 2009 in About This Blog | Permalink | Comments (0) | TrackBack (0)

Fort Worth and Tampa Add Transgender as Protected Class

Gender identity  In the past couple of weeks, both Fort Worth and Tampa have added transgender as a protected class.  First, Fort Worth amended their anti-discrimination ordinance to include discrimination on the basis of transgender, gender identity or gender expression.  The original city ordinance banned discrimination in employment, housing, and public accommodation based on race, sex, national origin, age, disability, religion or sexual orientation.  Next, Tampa approved a city ordinance that added gender expression and identity as a protected class regarding employment and housing.  Both cities define gender identity and gender expression in a similar fashion.  

There seem to be several municipalities passing similar ordinances.  It appears as though many local governments are out ahead of the Federal government again.  Perhaps the passage of these ordinances throughout the United States will allow for the passage of the ENDA in the near future.    


December 1, 2009 in Employment Discrimination | Permalink | Comments (1) | TrackBack (0)

Social Framework Evidence

Miller Continuing the debate on the use of social framework evidence in employment discrimination cases, Colin Miller (left) agrees with Melissa Hart and Paul Secunda: social framework evidence should be admissible.  Check out the essay Article of Interest — A Matter of Context: Social Framework Evidence in Employment Discrimination Class Actions by Professors Hart and Secunda, cross-posted at Feminist Law Professors and at EvidenceProf Blog.  Melissa & Paul's most recent essay on the topic, published by Fordham Law Review, is here.


December 1, 2009 | Permalink | Comments (0) | TrackBack (0)

Sullivan on The Future of Disparate Impact

Sullivan Charlie Sullivan (Seton Hall) has just posted on Northwestern U. L. Rev. Colloquy Ricci v. DeStefano: End of the Line or Just Another Turn on the Disparate Impact Road?  Here's the opening salvo:

Reports of the death of Title VII’s disparate impact theory of discrimination in the wake of Ricci v. DeStefano may be exaggerated.  Widely praised and widely criticized in the newspapers and the blogosphere, Ricci is the latest, but not the last, chapter in a long-running feud between Congress and the Supreme Court regarding disparate impact.


December 1, 2009 | Permalink | Comments (0) | TrackBack (0)

Monday, November 30, 2009

DOL's Employment Law Guide

Dol The U.S. Department of Labor today announced the availability of an updated version of its Employment Law Guide, an online publication that describes the major employment laws administered by the department.  The Guide helps the public — workers and employers — understand many of the laws affecting the workplace.  It helps small businesses develop wage, benefit, safety and health, and nondiscrimination policies and benefits employees and employee representatives who need information about worker rights and responsibilities under federal employment laws. 

The Employment Law Guide is a companion to the department’s FirstStep overview advisor, an online system that allows employers to determine which federal employment laws apply to them by answering a few simple questions about relevant variables.   


November 30, 2009 | Permalink | Comments (0) | TrackBack (0)

Mississippi Law Journal Launches New Online Companion - MISSing Sources

Books A shout-out to the law journal at my old stomping grounds. The Mississippi Law Journal is announcing the launch of its new online companion - MISSing Sources:

MISSing Sources began in the fall of 2009 and features (1) student articles such as case notes and comments, (2) responses to printed articles and (3) short faculty/practitioner essays.
Our goal is to create an online companion to our print-version of the Mississippi Law Journal, which features pieces from students, faculty, and practitioners. We hope to foster an arena for extended academic discussion on current legal issues, while also providing a formal outlet for citation by subsequent law reviews and courts. Responses and essays can be written, posted, and accessed in a very timely fashion, avoiding the printing process that can take months.
At the beginning of each school year, we will have a group of articles released together. After which, we will upload new content as they become available throughout the year. Rather than separate issues for its content, each article will be referenced to the concurring print journal issue. Each article will be archived on our website for future access.
For example: David G. Sansing, Walker W. Jones, III & Jason R. Bush, Unequal Justice: An Unintended Consequence in Mississippi Counties with Two Judicial Districts, 79 Miss. L.J. MISSing Sources 1 (2009),
We would like to offer your Workplace Prof Blog readership, other practitioners, professors, and colleagues alike an exciting opportunity to contribute to MISSing Sources. We are continually accepting and reviewing potential content and encourage them to join in - even if only a few pages. We are open to both informal and formal works.
For more information - or to simply view our content - please visit their website. If you have any questions, please contact Stephen Smith at or their Electronic Journal Executive Editor, Arthur Park, at

November 30, 2009 in Book Club, Scholarship | Permalink | Comments (0) | TrackBack (0)

More on the EEOC and Consent Orders

EeocDuring his stint guest blogging for us, Jason Bent asked this burning question: Why Isn't the EEOC Pursuing Better Consent Orders? A settlement in a serious sexual harassment case reported earlier this month by the EEOC might provide some clues.

The suit was brought by the EEOC against the Cheesecake Factory, alleging that the company tolerated very serious sexual harassment of male servers by male kitchen staff in Phoenix, and the facts are really outrageous.

In its lawsuit (EEOC v. Cheesecake Factory, Inc., CV 08-1207-PHX-NVW), the EEOC charged that Cheesecake knew about and tolerated repeated sexual assaults against six male employees by a group of male kitchen staffers. The company denied the allegations. However, according to the agency, the evidence overwhelmingly showed that the men suffered sexually abusive behavior, including abusers directly touching victims’ genitals, making sexually charged remarks, grinding their genitals against them, and forcing victims into repeated episodes of simulated rape. Managers witnessed employees dragging their victims kicking and screaming into the refrigerator, the EEOC charged. 

Complaints to virtually every manager at the restaurant were made, but they never put a stop to it. Victims felt helpless, the agency said, and one finally had to call the police.

The consent decree that the company agreed to will last two years. In addition to providing monetary relief for the six victims, the decree requires more training for its employees and managers about sexual harassment, and more importantly, it requires the company to institute an ombudsman to field and address sexual harassment complaints by employees. If the company does not comply with the terms, the EEOC can pursue sanctions to enforce the settlement. This isn't exactly a monitor or continued EEOC involvement, but it's certainly a good step in the right direction.

The underlying facts bear some similarity to the egregious conduct the supervisors in EEOC v. Dominion Correctional Servs.LLC. engaged in, although that case may be more egregious based on the identity of the harassers (managers) and the more express quid pro quo requirements of the demands for sexual favors. But in both cases the victims were exposed to conduct that was so severe that it likely violates criminal law. There was no ongoing monitoring in that case--although the company did agree to engage an outside investigator for all future sexual harassment complaints.

So why the difference? Well one important one seems to be the nature of the business--who it markets its services to, and how competitive that business is. The private prison is likely not in a very competitive business, or at least not competitive in a traditional way. It markets its services to the state, but likely doesn't have much competition other than the state itself. And the state doesn't have as much incentive to penalize the company for bad employment practices (maybe misconduct related to inmates, although the state is likely not on the hook for that either). So why should the prison agree to much ongoing interference? What does it have to lose other than the money it agreed to pay out?

The restaurant industry, on the other hand, is highly competitive and depends on the good will of its customer base to continue to patronize it. I imagine that if people think the company is bad enough to their employees they won't go there to eat--they might even think that the bad behavior could easily carry over into the food preparation. And overall, it will hurt the brand, which means other Cheesecake Factory restaurants may suffer. So the Cheesecake Factory has a much greater incentive to agree to a greater degree of monitoring or other intervention, which it can use to protect and promote its brand. The restaurant has much more to lose in the long run, and is thus much more likely to agree to more stringent non-monetary conditions.

That may not be the only difference, but it seems an important one.


November 30, 2009 in Employment Discrimination | Permalink | Comments (3) | TrackBack (0)

Eighth Circuit Reinstates ERISA Case Against Wal-Mart Involving Iqbal Plausibility Standard

401K_2 A number of my ERISA friends have sent me the case of Braden v. Wal-Mart Stores, No. 08-3798 (8th Cir. Nov. 25, 2009).  The case involves a class action dispute, alleging breach of fiduciary issues in the way that Wal-Mart managed its profit sharing and 401(k) retirement plans:

The gravamen of the complaint is that appellees failed adequately to evaluate the investment options included in the Plan. It alleges that the process by which the mutual funds were selected was tainted by appellees' failure to consider trustee Merrill Lynch's interest in including funds that shared their fees with the trustee. The result of these failures, according to Braden, is that some or all of the investment options included in the Plan charge excessive fees. He estimates that these fees have unnecessarily cost the Plan some $60 million over the past six years and will continue to waste approximately $20 million per year . . . .

Braden alleges extensive facts in support of these claims. He claims that Wal-
Mart's retirement plan is relatively large and that plans of such size have substantial bargaining power in the highly competitive 401(k) marketplace. As a result, plansn such as Wal-Mart's can obtain institutional shares of mutual funds, which, Braden claims, are significantly cheaper than the retail shares generally offered to individual investors. Nonetheless, he alleges that the Plan only offers retail class shares to participants. Braden also avers that seven of the ten funds charge 12b-1 fees, which he alleges are used to benefit the fund companies but not Plan participants.

The case is significant because the Plan has over one million participants and nearly $10 billion in assets.

Wal-Mart had moved for a motion to dismiss under 12(b)(1) and 12(b)(6) and:

The district court granted the motion, concluding that Braden lacked constitutional standing to assert claims based on breaches of fiduciary duty prior to the date he first contributed to the Plan and that he otherwise failed to state any plausible claim upon which relief could be granted.

The Eight Circuit reversed and remanded. Specifically on the standing issue, the court held that that Braden made a sufficient showing on Article III standing and proving a cause of action under ERISA and that the district court erred in concluding that he lacked standing to maintain claims for the period before he began participating in the Plan:

In reaching this conclusion, the district court mixed two distinct issues. Whether Braden may pursue claims on behalf of the Plan at all is a question of constitutional standing which turns on his personal injury. Whether relief may be had for a certain period of time is a separate question, and its answer turns on the cause of action Braden asserts.

On the plausibility issue, the court took issue with the high standards the district court placed on the plaintiffs under Iqbal and Twombley:

We conclude that the district court erred in its application of Rule 8. Accepting Braden's well pleaded factual allegations as true, he has stated a claim for breach of fiduciary duty.

The district court erred in two ways. It ignored reasonable inferences supported by the facts alleged. It also drew inferences in appellees' favor, faulting Braden for failing to plead facts tending to contradict those inferences. Each of these errors violates the familiar axiom that on a motion to dismiss, inferences are to be drawn in favor of the non-moving party.

More specifically,

Braden's allegations are sufficient to state a claim that appellees breached their duty of loyalty by failing to disclose details about the revenue sharing payments. Braden alleges that those payments corrupted the fund selection process—that each fund was selected for inclusion in the Plan because it made payments to the trustee, and not because it was a prudent investment.

So, at this stage of the litigation, nothing of real substance has been decided as far as ERISA violations, but at least the court suggests that ERISA defendants will not be normally able to avoid more searching inquiries into their fiduciary acts in these fee litigation cases through a combination of standing and process objections.


November 30, 2009 in Pension and Benefits | Permalink | Comments (0) | TrackBack (0)